Posts Tagged ‘manage’
Two Rules To Manage Your Money
Money can be addictive as any narcotic. As your income increases, so does your spending. A lack of education on managing money is one reason many people are faced with financial dire straits today.
There are two rules that everyone, young and old, should learn about money. The first rule is ‘don’t buy what you can’t afford.’ The second rule is ‘always pay your bills.’
Rule Number One
Although this sounds like a simple rule, it is seldom followed – only buy what you can afford. Spending more than you can actually afford is often due to incorrect budgeting. Some suggest that you should always have at least six months of living expenses in the bank for safety in case you lose your job. This is a good rule, but what constitutes living expenses?
Your living expenses are the bare necessities that you cannot do without, such as food, your mortgage or rent, electricity and water, car payments and fuel and so on. You will notice that there’s no room in there for that great jacket you saw last week, even if it is on sale, and no need to cater for expensive holidays either. The term necessity also assumes that if the worst happens and you do lose your job, you will immediately eliminate the extra niceties that you can no longer afford.
Losing your job may mean having to do without the ‘optional extras’ like mobile internet services, call forwarding or redial on your land line. If you can do without it, consider cancelling your cable service as well, or at least cut down on the number of channels in your package. Check your contract carefully first, as sometimes you will be forced to pay penalties for cancelling or changing the contract.
After basic living expenses, you should also have enough left over for emergencies. Emergencies include repairing the car, replacing the broken boiler, or paying for healthcare. You need to be able to have your health attended to, drive to and from work safely and live comfortably in your home, and these must be considered when saving money as well. Emergency funds should never be wasted on things that you want but don’t need.
Rule Number Two
Now that you have learned to only buy what you can afford, the second rule is ‘pay your bills.’ A bill is an obligation. If you have taken a product or service and have not paid for you, this is a form of theft. Although it is treated differently than someone who shop lifts from a local shop, you are still taking something that doesn’t belong to you until it’s been paid.
We are bombarded daily with images of material things, and actively encouraged to ‘live up the Joneses’ and buy the latest and greatest. Unfortunately, doing so does not make us the greatest. If walking into a store to buy another ‘thing’ makes you feel better, you probably need more than just a lesson in money management.
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